Issue 98  July 22nd 2016

This week Elon Musk released Tesla's new Master Plan, Part Deux, which in short is:
- Create stunning solar roofs with seamlessly integrated battery storage
- Expand the electric vehicle product line to address all major segments
- Develop a self-driving capability that is 10X safer than manual via massive fleet learning
- Enable your car to make money for you when you aren't using it

Besides consumer vehicles (Model S/X, Model 3 sedan/crossover, pickup truck), Tesla is in the early stages of development a heavy duty truck (ie., semi) and also a urban bus system. The heavy-duty truck/semi makes a lot of sense as the trucking industry is massive. In just the U.S., the trucking industry brings in $700 billion/year in revenue and accounts for 5% of the GDP. Also, the trucking industry is very fragmented with the largest 50 companies accounting for less than 30% of the market. The big opportunity in trucking does not lie in just selling semi trucks to others, but rather it lies in re-creating the entire industry of shipping items from point A to B. I personally think of it as Tesla Logistics, and it involves Tesla owning their own network of trucks, battery swap stations, and an entire logistics network to support the shipping of cargo from any one point to another. Similarly, Tesla's bus (or bus system) they're working on, ultimately won't be able just selling buses. Rather, it's about moving people from point A to point B in situations where cars aren't efficient or effective. I view the Tesla bus system as a more challenging endeavor because the business model is not as apparent as the trucking industry.

Autonomy is going to change everything about transport, and Elon's new master plan makes a focal point of that. Elon's conviction is evident to bring autonomy sooner than later. With autonomy, Elon shares the idea of allowing Tesla owners the ability to rent/loan out their cars when they're not in use, thus lowering the cost of ownership and potentially even earning money for car owners. This is the reason Elon thinks Tesla probably won't need to release a cheaper car than the Model 3, since income from car sharing will make the Model 3 within reach to most people.

Practically speaking over the long-term, Tesla needs to grow revenue and/or grow margin. With full autonomy, ride-sharing, Tesla semis and buses, and solar/storage, Tesla has potential to grow revenue and margin beyond their consumer vehicles. Strangely, utility-scale solar and energy storage (ie., powerpacks) were missing from the Master Plan. Perhaps it was an oversight, or perhaps it was intentional.

Overall, the new Master Plan, although it lacks the clear chronological steps of the original master plan, sets Tesla up to better the world through clean energy and transport, all the while growing their business in multiple trillion-dollar markets.